The South Dakota Contractor License: Guide to Registration & Requirements

If you're starting a construction business in South Dakota — or expanding there from another state — a key first step is knowing the rules and requirements around proper contractor licensing and registration. Most licensing in South Dakota is handled on a local level rather than a state level, and there are different requirements depending on what kind of work a contractor performs. This quick guide will sum up the rules and requirements around the South Dakota contractor license.

Contracting in another state? Check out The Ultimate Guide to Contractors License Requirements in Every State.

Who needs a contractor license in South Dakota?

South Dakota is unique: The majority of the population lives in just a few centralized areas, and it affects how the state handles contractor licensing.

South Dakota leaves the majority of licensing up to the local jurisdictions. The only contractors required to carry state-issued licenses in South Dakota are electricians and plumbers. Everyone else works with a local city or county in regard to licensing.

One thing that applies to everyone? All contractors engaged in construction need to register for a South Dakota Contractor’s Tax License with the Department of Revenue.

Is there a general contractor license in South Dakota?

While there are licenses for general contractors in South Dakota, they aren’t issued by the state. Instead, some individual cities and counties issue residential building licenses, which are generally the same.

However, general contractors specializing in commercial construction have very little regulation to deal with. 

How to get a contractor license in South Dakota

The rules about who needs a license and how they can get them depend on several variables. Electricians and plumbers need state-issued licenses, while GCs in one city might need a license — but not in the neighboring town.

We’ll cover these scenarios in a bit, but let’s first look at some tax considerations.

How to get a South Dakota contractor excise tax license

The South Dakota Department of Revenue requires all contractors who enter “into a contract for construction services” to carry a South Dakota contractor’s excise tax license. This includes contractors who repair or remodel existing real property and those who build new structures.

Contractor tax license applicants can find their application listed on the Department of Revenue’s website under “Apply for Business Tax License,” and they can apply entirely online. The information required is fairly straightforward, requiring just business type and company or owner identifying information. 

How to get a South Dakota electrical contractor license

Electrical contractors in South Dakota must pursue licenses through the Department of Labor and Regulation. The requirements are relatively minimal:

• Carry a South Dakota journeyman electrician’s license for at least two years (4,000 hours)

  • 2,000 hours must be commercial work
• Fill out this application, and have it notarized
• Secure a $10,000 surety bond
• Complete this verification form

The cost for applying is $50, and the cost for biannual renewal is also $50.00.

How to get a South Dakota plumbing contractor license

Like electricians, plumbers will have to pursue licensing through the Department of Labor and Regulation. To apply for a contractor’s license, you must:

• Have six years of experience as a plumber
• Have spent at least 1,900 hours per year during those six years as a plumbing contractor, plumber, or plumber’s apprentice
• Fill out the plumbing contractor application (which is the same application for all plumbing license types)
• Pay for the exam and licensing fee, totaling $375

How to get a South Dakota contractor license at the local level

Several of the cities throughout South Dakota have their own rules for contractors. The following includes some of the most populated cities as well as the regulations they require of contractors.

Sioux Falls

Sioux Falls doesn’t take the same laid-back approach to licensing that the state does. Instead, it requires all contractors performing work on residential one and two-family homes to carry licenses for work that requires a permit. And just about everything requires a permit in Sioux Falls — including sheds, decks, shingles, sheetrock, replacing exterior doors, and more.

The Residential Building Contractor license requires the applicant to take and pass the Construction Supervisor Examination, which is an open-book test held by the city. The requirements are:

• Fill out the residential business contracting license application
• Submit proof of a $20,000 bond
• Submit proof of $300,000 general liability insurance
• Pay the $75 application fee

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Electrical and plumbing

The City of Sioux Falls takes electrical and plumbing licensing even further. Applicants must hold a state-issued license, but the city will still require them to take and pass an examination. 

Electrical contractors must:

• Fill out the electrical contractor's license application
• Submit proof of a $10,000 bond
• Pay $75 application fee

Plumbing contractors must:

• Be a master-level plumber
• Fill out the master plumbers license application
• Submit proof of $10,000 bond
• Pay the $75 application fee

Rapid City

Rapid City will most likely require the majority of contractors to carry city-issued licenses, but information is sparse. The city’s website states:

Aberdeen

Aberdeen, South Dakota, requires licenses for most contractor types, but the city keeps contractor licensing requirements under wraps. The city’s website states:

Regulated contractors that require licenses include:

• Residential building contractors
• Plumbers
• Excavators
• And more additional categories

Brookings

The only contractor types that Brookings, South Dakota, licenses are plumbing and residential contractors. Applicants will use the same paper application as circuses, carnivals, and pawnbrokers.

The requirements for plumbing contractors are:

• Pay a $50 fee
• Submit proof of a $1,000 bond
• Copy of state-issued plumbing contractor license
• Submit proof of $50,000/$100,000 general liability insurance

The requirements for residential building contractors are:

• Pay a $75 fee
• Supply a tax excise number
• Provide proof of worker’s compensation insurance
• Provide proof of liability insurance in the sum of $500,000 or more for each occurrence

Watertown

Watertown, South Dakota’s Community Development Building Services Department only requires licenses from residential building contractors. After filling out the online application, contractors must also complete the following:

• Pay a $60 fee
• Provide proof of $500,000 liability insurance policy
• Proof of worker’s compensation insurance

Penalties for unlicensed contracting in South Dakota

South Dakota doesn’t require many contractors to carry a contracting license, but it’s serious about its tax excise requirements. Contractors who don’t carry the appropriate tax excise license are guilty of a Class 1 Misdemeanor and can expect to pay fines up to $1,000 and possibly spend up to a year in jail. Continuing to contract can boost the fines up to $4,000 or up to two years in jail.

Beyond South Dakota’s laws, each municipality has the ability to impose its own fines and penalties. Unlicensed contractors can expect to pay thousands of dollars if they don’t get the appropriate licenses.

South Dakota’s mechanics lien laws do not explicitly require a contractor to carry a license to file a mechanics lien. But, just because the state’s law doesn’t require a license doesn’t mean you shouldn’t carry one: If you have to enforce your lien, performing unlicensed work may not help your case.

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